Unpacking Google’s India Investment

Google has recently announced its intent to invest Rs 75,000 Crores ($10 Billion USD) in India over the next 5-7 years (Ref: Google blog, July 2020. https://blog.google/inside-google/company-announcements/investing-in-indias-digital-future/). A big investment commitment such as this is viewed as a positive development by many but there are important underlying issues which are what we explain in this article.

In his announcement, Google CEO Sundar Pichai expressed his passion for working alongside the Indian government to build India’s “digital future”. He added a personal touch to the announcement by referring to cherished moments when he was growing up in India. For example, he pointed to his grandmother’s habit of haggling during grocery shopping and to the “sare jehan se accha” song which he enjoyed watching on the Doordarshan tv channel every day.

In this context, it is worth noting that above all else, Pichai’s job is to deliver great returns for Google shareholders and to promote the interests of his adopted country, the USA, and not India’s. Google’s mission is to “organize the world’s information and make it universally accessible and useful”. While fulfilling its mission, Google gathered personal data of all of its users both with and without their knowledge (Ref: Jeff Nesbit, Google’s true origin, Dec 2017. https://qz.com/1145669/googles-true-origin-partly-lies-in-cia-and-nsa-research-grants-for-mass-surveillance/), and has propelled itself to become a $1 Trillion company.
 

Basic Math of the Investment

Currently, there are 56 Crores internet users in India (Ref: Economic Times, Dec 2019. https://economictimes.indiatimes.com/tech/hardware/overall-india-handset-market-growth-to-fall-in-2020/articleshow/72950192.cms). The Rs 75,000 Crores that Google intends to invest over the next 7 years translates to an annual spend of Rs 190 for each user. On the mobile front, India has 45 Crores smartphone users and 55 Crores feature phone users. 80% of the feature phone users are expected to transition to a smartphone within 3 years and hence become internet enabled.

Per Jacques Seguela, Founder of Havas Group, the value per year of an individual’s data is €2,000 which is about Rs 1.7 Lakhs (Ref: WION TV, March 2019. https://youtu.be/-Fe-0E0EcQE). This number may be less for Indian users because of their relatively lower income levels. While Google doesn’t capture all of an individual’s data, as the provider of the market dominating Android OS, and of the Search, Maps, YouTube and Chrome apps, they do capture a significant share of the data and hence its monetary value.

Given the monumental user numbers and the promise of seemingly unlimited rewards, Google’s investment couldn’t have been a tough decision to make.
 

Investment Focus and Implications

Google’s investments will be directed towards building data centres, building products for India which can then be launched all over the world and buying shares in companies of all sizes – large, medium and startups. The notable products that they will build include cheap smartphones for feature phone converts and “AI for social good in areas such as health, education and agriculture”.

Data Centres: Currently, USA’s laws make it challenging for Indian authorities to get access to Indian data that is hosted by USA corporations. These firms are very good at taking data out of other countries’ jurisdiction and moving it to data centres in the USA or to jurisdictions that are under their de facto control. For any data centre that Google builds in India, the Indian government must have the oversight authority to ensure that the privacy of Indian citizens is not violated and to ensure that other countries do not exercise any jurisdiction.

Investments in Companies: Soon after the Google announcement, Reliance announced Google’s investment of Rs 33,737 Crores in Jio with co-development of cheap smartphones running the Android OS as an important area of focus (Ref: Economic Times, July 2020. https://telecom.economictimes.indiatimes.com/news/google-to-approach-cci-for-approval-on-rs-33737-cr-deal-with-jio-platforms/77120110). Both Reliance and the Indian government must ensure technology transfer of both the hardware and software intellectual property (IP) to the Jio team. The Jio team must ensure that there are no backdoors for Google to extract data out of India.

Google also intends to invest in early stage and established startups. This is a mechanism that large MNCs use to build up their acquisition pipeline through which they get access to innovative technologies, talent and customers. However, this is not always good for India because startups that have the potential to become India’s high tech giants never grow to that stage. Hence, it is critical for the Indian government to figure a process for tagging certain startups as critical to national security and hence out of bounds for foreign acquisition.
 

Artificial Intelligence

AI for Social Good Most users of free software or services have learned the hard lesson that ‘if a vendor offers something for free, then the vendor will figure out a way to monetize user data in an overt or covert manner’. While there might be some good that comes from allowing Google to enter the education, agriculture and health sectors, there are also major risks.

AI for Education has the potential to capture the workings of a student’s mind with extraordinary detail. Google could monetize this data by directing prospective employers to students or whatever else can make them money. India could end up losing even more of its best talent to foreign countries than it already does.

AI for Agriculture will expose India’s farming and food supply chain processes to Google. Google products like search and YouTube are already known to have a bias towards USA’s interests. In a world where countries engage in coopetition (cooperation and competition) at the same time, India’s food supply itself could be a vulnerability on the game board. AI for Health has similar risks.

Google is already known to build behaviour profiles for all of its users (Ref: Shoshana Zuboff, Harvard Professor, Surveillance Capitalism, Dec 2019. https://www.youtube.com/watch?v=hIXhnWUmMvw). Someone other than your close family and friends knowing about your intricate behavioural characteristics is a jarring proposition. Google’s AI for Education, Agriculture and Health will expand this proposition to include your daily essentials like food and health. Hence, the data, the learnings and the AI must all be under full control of Indian entities. This is the only way to protect Indian interests. Since Google’s stated goal is “social good”, it should not have any issues passing on the technology to Indian entities.
 

Conclusion

The FAANG (Facebook, Amazon, Apple, Netflix, Google) global monopolies have become unstoppable behemoths that swallow everything in their path – companies, startups, business data and user data. MNCs like Walmart and Verizon aren’t far behind. Further, some of these companies use their “investments in India” as an argument for why India should not tax them (Ref: Economic Times, July 2020. http://www.ecoti.in/U9dIUZ42). India’s users and government have to exercise constant vigilance in order to protect Indian data and businesses wherever MNC investments are involved.

Deep Colonial Hangover

Regardless of how different world powers behaved in the past, what really matters is how they behave in the present and in the future. Here are some colonial behaviours which are highly inappropriate in the 21st century. The purpose of articulating these behaviours is to expose them to the unaware with the hope of influencing their decision-making.

  • Viewing the value of human life in other countries as way less important than in their own countries
  • Using Divide and Rule at all units of geography – beautiful strategy of the past 300 years which is, frankly, disgusting to the overwhelming majority of human beings today
  • Stifling the evolution of arcane economics and financial systems which were built solely with the colonial mindset of establishing and retaining advantage over others’ forever
  • Stifling others’ industries and triggering their stagnation/destruction using geopolitical, technological or other means with the intent to maintain a “lead”, to gain advantage in commerce or to retain “power” and “control”
  • Enforcing rigid rules constraining others’ development the lack of which, ironically, were the pillars of the said countries’ advances

This video provides a good illustration of what colonial hangover looks like.

Asian Speaker #1, Parag Khanna, talks about how Asia, after the anomaly of the past 3-4 centuries of the colonial era, is returning to its historically traditional role as the centre of world commerce. He supports his theory through rigorous data analysis and observed trends.

Asian Speaker #2, Yu Jie, highlights some of the policy issues that China policymakers have to overcome in order to continue to execute as they have for the past several decades. She highlights the Chinese view of the world, apparently articulated 2,500 years by Mozi, a popular Chinese philosopher. The view is “how to behave yourself, then organise a good family, then run a country in good order, before you can dominate the world”.

Non-Asian Speaker #1, Michael Cox, disses Parag’s “Future is Asian” narrative, even before Parag introduces his narrative to the audience! Michael refers to Parag’s theory as being merely the third version of two other disastrous “Asia Rising” narratives/events in the 20th century – the 1903 Japan victory over Russia, the first by a Asian power during the colonial era, and the 1949 Independence of China from colonial rule. It seems this speaker views all history as being a subset of the colonial era! Maybe self-awareness of this narrow view of history explains his peculiar body language during most of the presentation.

Non-Asian Speaker #2, Gideon Rachman, articulates 4 models as the way forward for India:

  • be a post-colonial South-oriented non-alignment movement leader
  • be part of a rising Asia which would put them in the “China camp”
  • “get in bed with the Americans” to counter China
  • continue to be defined by the conflict with Pakistan

So, all of his models for India categorise the country as an inconsequential entity or a subservient entity. Colonial hangover nirvana (salvation)!

Broadly speaking, both Gideon and Michael seem resentful of any progress that Asia, particularly any country other than China, might be experiencing. This of course, is due to their obsession with the simplistic “Us vs Them” meaning “West vs China” or “USA vs China” narrative which simply diminishes the aspirations, intellectual maturity and the growth reality of all other Asian countries.

The other recurring theme about these speakers is their focus on all the things that could go wrong with the Asian narrative. Here is where their colonial hangover becomes painfully obvious. They come up with all kinds of creative reasons for why the West will continue to dominate Asia either due to existing regional dynamics or how the West might make it so by reaching into the colonial best practices handbook.

The takeaway for the large, influential countries of the 21st century is two-fold:

  • When defining the country’s vision and brand for the 21st century, observe entities with colonial hangovers closely, so you can get clarity on what not to do.
  • If you collaborate closely with entities that have colonial hangovers or are perceived to be so, start to distance yourself from such entities. This will motivate the population of nations that were subject to colonial injustices to embark on a journey to establish a trust-based relationship with you.

Games and Rules

The “Great Game” was a 65 year old political and diplomatic confrontation between the British and Russian empires from 1830 AD to 1895 AD. The motivation, per British allegations, was about control and leverage over the south and central Asian regions including what we now know as Afghanistan. You can read all about it here.

One can only guess what kinds of geopolitical games are played in today’s times. Here’s an article published in the The Hindu about the Feb 2019 Pulwama attack in Kashmir.

In order to understand games better, let’s use Chess as an example. In chess, there are the inanimate chess pieces (pawns, kings, …) who fight each other with the prime goal being to secure a victory for their side. Each piece has a set of capabilities and options to move. However, they can’t move by themselves – the 2 players that are playing the game have to move them. So, the pieces are useless unless there are players to plan, strategise and move the pieces. At the end of the day, it is the player that wins/draws/loses a game. The motivation for the players is to “prove” that they are better than their opponent.

In competitions, the prize money, the trophy and associated fame are additional motivators. Aside from the audience, there are additional non-obvious parties involved as well.

  • Organizers: Players can play only when there are organisers to organise an event. These are the folks that plan and execute the event. They rent a venue for the event, get players to participate, market the event, sell tickets, sell media (tv/cable/satellite) rights and partake in the financial outcomes.
  • Rule Makers: These folks are more important than the Organisers. They might even be from the same pool of people as the Organisers. While they are the most hidden from public view and scrutiny, they are also the most powerful group. Players are the public facing faces of the game, but Rule Makers are the hidden, behind-the-scenes folks that actually run the games. Ultimately, they can dictate the outcomes of games by controlling/restricting access to only those players who will generate the outcomes that they desire.

Let’s take the example of Field Hockey to prove above points. In Olympic Games, from 1928 (when South Asia subcontinent teams started participating) to 1984, teams from the subcontinent won the Gold Medal 11 out of 13 times. Most, if not all, of these tournaments were held on natural grass surfaces. The Rule Makers and their Allies stepped in and created a movement to play the game on artificial turf which fundamentally changed the nature of the game. Instead of finesse, which the subcontinent teams proved to be unbeatable at, the new game favoured those with better physical conditioning and stamina. The outcome of this change has been clear – till date, subcontinent teams haven’t won a single gold medal in the 8 tournaments that have been held since then.

Enjoy gaming. Just understand what role it is that you are playing.

The Future is Asian

Parag Khanna’s The Future is Asian was released earlier this month (Feb 2019). This is an epic piece of work at a pivotal, transitional phase in the global world order. Parag has an impressive resume with degrees from Georgetown University and the London School of Economics. Professionally, he has been associated with the World Economic Forum, US Government/Military projects and the Lee Kuan Yew School of Public Policy.

Per my reading of The Future is Asian, the two key characteristics that are critical for Asian countries are:

  1. Rule of the law, not democracy, has a strong correlation to economic performance. Politicians, administrators and residents MUST make this the highest priority. Some Asian countries might very well not be part of the Asian future if they don’t take this aspect seriously.
  2. Technocratic Governance has been a key contributor to the success of Asian leaders like Singapore and China. Government employees and bureaucrats, particularly at the upper echelons of organisational hierarchies, must be trained in the technocratic planning and execution methods from these countries. This will enable articulation and implementation of long term (multi decade) policy regardless of short term election cycle outcomes.

If you can’t stomach the idea of reading a 450 page book, you could watch this 1 hour video instead. This might warm you up for the longer read.

There are plenty of interesting slides in his presentation. A couple that caught my eye are below.

Slide 1: Parag’s take on the new world order.

Slide 2: Since parents raise children painstakingly and pay most of their bills until they are able to sustain yourself, it makes sense for children to give high priority to these relationships amongst all others. Likewise, it is important to prioritise the relationships with your large trading partners. Parag’s slide below highlights the volume of trade among Asian countries.

China’s largest Asia trade partners are: ASEAN – $330B, Korea – $250B, Japan – $220B

India’s largest Asia trade partners are: West Asia/Gulf – $200B, China – $80B, ASEAN – $70B

Slide 3: Parag mentions that one of the hardest things to articulate was the commonality across Asian systems. The following 3 values is what he came up with.

Autonomous Region across Borders

One of the enduring legacies of the colonial age is messy borders. Borders drawn by individuals that rarely had any insights into the culture, history and ground realities.

Couple interesting articles to ponder on:

A technical solution to messy borders will be tremendously beneficial to developing countries in Asia and Africa. Designing an Autonomous Region for a geographical area that spans two (or more) nation states is an idea worth considering. The rules:
a) Sovereign borders stay the same
b) Defense and Foreign Policy is handled by the respective nation state
c) All other systems and governance are dictated by residents

SEZs, Blockchain and Refugees

Perhaps Lotta Moberg’s big idea is about locating Special Economic Zones (SEZ) right outside of refugee camps. Governments struggle to accept refugees because of their populace’s sentiments against hosting and feeding outsiders. But if refugee camps and SEZs can be co-located in locations that can be attractive to investors, then the host governments might see a net positive derived from a section of the refugees being productive.

Other noteworthy points about SEZs from Lotta’s presentation:

  • The Shenzhen SEZ is typically cited as the benchmark for how to do a SEZ right. This SEZ was created due to the desire of some Shenzen businessmen to trade with Hong Kong. So, it was a bottom up business driven initiative rather than a top down government driven initiative.
  • A SEZ was required for Shenzen because the kind of regulations that could be implemented in the pilot zone were politically impossible to implement on a country wide basis.
  • SEZs are featured by fiscal and regulatory benefits. Fiscal benefits indicate tax and tariff exemptions. If the SEZ is all about companies relocating from other locations to take advantage of these benefits, then the SEZ may not be beneficial to the country as a whole. This merely translates to government funded reallocation of resources.
  • SEZs should be considered as an avenue to test out Blockchain solutions. Using Blockchain and Cryptocurrencies for fiat money is a hot button issue for various governments. However, the technology can be applied to several other domains and limiting the experiments to within a SEZ could be a nice way to pilot these solutions.

Lotta’s book recommendations at the time of the podcast:

  • Richard Bookstaber, “The End of Theory”
  • Eric Beinhocker, “Origin of Wealth”
  • Adam Smith, “Theory of Moral Sentiments”

Role of Central Banks in Economic Crisis: Japan and Thailand

Bank of Thailand Story: 1997 Crisis

1:07:53 – 1:19:16

The IMF by the way asks countries to implement free-market policies except the IMF policies themselves are not free-market policies, they are credit guidance. You are forced to reduce your credit creation (now) turning this banking crisis into a massive recession. So essentially this combination of IMF and central bank caused this.

Bank of Japan Story: 1945 Crisis vs 1991 Crisis

1:00:05 – 1:07:53

Foreign vs Domestic Investors

Foreign Direct Investment [See Why is FDI Important here] is good when the money comes into the host country. However, foreign investors tend to be focused on short term returns. Temporary changes in the local geo-political or political landscape, or direction indicators from central banks in wealthy countries tends to have an exaggerated panic-stricken, paranoid influence on such investors. When FDI investors run for the exits in such circumstances, the consequences for the host country can be quite disastrous. Stock markets panic and make the overall investment climate appear to become undesirable rapidly and irrationally.

Hence, Domestic Investment is a far better option for emerging economies. When a country enters a cycle of sustained growth due to trends such as a positive demographic dividend, then certain segments of the country’s population invariably have high disposable incomes. Such segments of the population have to be educated and motivated to invest in productive investments rather than investing in assets or spending on consumer goods. See Prof Richard Werner’s presentation below where he makes his case for the benefits of investment credits for creation of goods and services in order to achieve sustainable growth. It is quite silly for investors in emerging economies, particularly folks with high disposable incomes, to invest in assets (real estate) or in high end consumer goods (imported cars, etc) when the critical, pivotal need is domestic investment in goods/services creation. And when such investment is essential for sustainable long term growth.

The question of who captures most of the profits from the creation of new value is also very important. It is safe to assume that most of the financial returns derived from new goods/service offerings is captured by the investors. So, in a high growth emerging economy it would be preferable for domestic investors to derive most of these benefits as opposed to foreign investors. Indeed, all businesses including foreigner funded ones do create jobs and this results in multiplier effects in the local economy. However, as mentioned earlier, the finicky behaviour of foreign investors exposes the host country’s economy to far greater risks than any possible rewards.

Meaning of True Innovation

One has to appreciate her intellectual candour as it relates to her decision to not point to “hard work” as the reason behind the disparity. For anyone to do so in the year 2018 would be truly pitiful.

Little child: You know mommy how come our friend here makes less than $1,000 a year but you just bought a two thousand dollar ukulele?

Mom: I looked at my husband I said well what are we gonna say? We could tell them this Ayn Randian thing about “you know we work harder so we make and we deserve that stuff”. But, at the end of the day we just said “you know what, life’s unfair and you know we’re lucky enough to be born in a place where we can afford those things and where we can afford good education and good healthcare and some aren’t as lucky”.

Little child: I get it. You know we’re not all born equally, but we still have to treat people equally right?

Mom’s narrative: It’s such a simple concept and I had to think about it. And over the next couple months I (you know) went to a number of tech conferences and what I realised was that the greatest innovations of our time have always happened when we actually treat everyone equally. Innovation is not incremental (right). True innovation, revolutionary innovation, is something where it touches everyone and it can touch everyone and it touches the masses.

Side Note. When an extraordinary businessperson such as Mei Mei Hu, CEO of United Neuroscience, has to point to ‘luck’ as being the reason for the quality of life that the family enjoys, that is shameful. Shameful, not for Mei Mei, but for all humanity. One has to appreciate her intellectual candour as it relates to her decision to not point to “hard work” as the reason behind the disparity. For anyone to do so in the year 2018 would be truly pitiful.

Knowledge Web vs Human Web

The current internet – the HTTP based world wide web – is not what Tim Berners Lee envisioned when he laid the foundation for it in 1993. On the positive side of things, the internet has democratised access to information which in turn has given tremendous confidence to individuals, particularly those from developing countries. However, it has proven to be ill-suited for personal and social topics.

Platforms such as Facebook have clearly and consistently demonstrated that they lack the competence, maturity and wisdom that is required to secure and manage users’ data. Also, they have created massive societal problems on a global scale by providing the framework under which fake news is easily propagated and extremist viewpoints are self-reinforced amongst uninformed users and groups. Extraordinary data breaches and violation of user privacy has become the norm.
 

The Knowledge Web

Data aggregation by a few oligarchic technology behemoths might actually be beneficial when it comes to dissemination of knowledge. Perhaps some entities such as Google and Amazon Retail can continue to thrive as we look forward to the 2020s and 2030s, under the umbrella of the “Knowledge Web”. But, for topics related to individuals, we have to reach back to Berner Lee’s original vision.
 

The Human Web

The Human Web is for human beings. It is the web where the primary focus is the interests of individual humans – not nation-states, not continents, not religions, not races, not corporations, not non-profits, not surveillance agents, not hackers, not animals, not reptiles, not aliens, not any other grouping. The motivation for this web is to protect and promote individual interests and individual privacy.
 

Blockchain

TODO

Global Impact

you should be thinking that this is more and more of a treasure that you have and that the best thing you can do with it is to share it laterally horizontally, copy and paste that everywhere so that the thing that you have in your hands that might have been useful to people goes everywhere that it needs to be …

“.. it is a form of censorship if you bully change makers and innovators by making them prove to you how they can self sustain and grow financially. If that’s what you put them through first, you are censoring our ability to be creative, communal and collaborative right when we most need to do that. And I would encourage you if you have the comfort, the privilege, the power to maybe back off on that a little bit and try investing in some of the people that are running these experiments with ownership design, (then) you are making a very timely and helpful investment (for the humanity, for the planet) .. ”

If you are fortunate enough to have a company, to have resources or even bump into a change maker or an innovator who has a good idea, if you have something that’s relevant right now in your hands, that’s amazing. That is so fortunate obviously, obviously most people don’t have that. If you have that and then you think ‘you know what I’m gonna do is I’m gonna build myself like an empire out of this. And how would I do that (is) okay I got to really consolidate in .. 2-3 countries over .. 3-4 years, it doesn’t make sense to do that anymore … (to) maintain all (of) our power and control as we get over there …’ ”

“you should be thinking that this is more and more of a treasure that you have and that the best thing you can do with it is to share it laterally horizontally, copy and paste that everywhere so that the thing that you have in your hands that might have been useful to people goes everywhere that it needs to be …”

Future Workers – Creative, Adaptable, Problem-Explorers

Invigorating talk “Future of Human Potential” by Vivienne Ming, PhD in NeuroScience & Psychology from Carnegie Mellon, Entrepreneur, Speaker.

Here are my takeaways from this presentation:

  • The best performers on any job are those that do the job because of the pure joy they derive from it. For these folks, incentives are not the driving force.
  • “Explorers” is what the society needs and will value as AI and automation become more pervasive over the coming years. The Meta-Learning slide below shows the 50 characteristics of Explorers.

The hilarious part is at 11:24-12:08: “If you really want to understand. I mean actually everything I’m gonna say about the future (of) work doesn’t matter, this is what’s really important. After a whole session here of innovation and exponential technologies, if you can appreciate that tens of millions of dollars of CIA funding, two dozen dissertations, 20 years of research distilled down into animating cats on your phone, then you (y’all) truly understand (that) all innovation ends up being animated cats on phones. It’s just a fundamental reality. …”